OTS publishes review into the taxation of savings income

OTS publishes review into the taxation of savings income

The Office of Tax Simplification (OTS) has published a comprehensive review into the taxation of savings income.

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In its review, the OTS identified areas that could be simplified, as well as areas that might benefit from ‘further work’.

The OTS stated that the UK tax system ‘works well for most taxpayers’, but also found that many individuals ‘continue to worry about the tax treatment of their savings income’.

The calculation of tax on savings income ‘is not always straightforward’, said the OTS.

It revealed that the tax complexity on savings and investment income can be attributed to the interactions between the ‘many reliefs and allowances’. A solution to this will need to take a ‘comprehensive view’ to ensure that taxpayer benefits derived from reliefs and allowances are ‘preserved’, the OTS stated.

Commenting on the review, Angela Knight, Chairman of the OTS, said: ‘The UK savings tax system works well for most savers as they don’t have to pay tax on income from their savings until it is more than £1,000 a year, and they can also contribute £20,000 a year to their ISAs where income is not taxed either.

‘But many taxpayers continue to worry that they will be taxed on their savings income, and misunderstandings and confusion remain. This is the area, and inevitably the complexity, that the OTS considers is now the time to address.’

The review can be viewed in full here.

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Government outlines proposals to fine company directors for unsolicited calls

Government outlines proposals to fine company directors for unsolicited calls

The government has outlined new proposals to fine bosses of UK businesses which make unsolicited phone calls.

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Figures published by regulator Ofcom revealed that consumers received 3.9 billion unsolicited phone calls and texts in 2017.

As part of a government consultation on the matter, bosses of firms making cold calls could be fined up to £500,000 and be held personally liable for their company’s actions.

Currently, businesses are held responsible for making unsolicited calls, and are liable to fines of up to £500,000 if they are caught doing so.

The new proposals will also make it easier for the Information Commissioner’s Office (ICO) to ‘more effectively share information’ with Ofcom in regard to nuisance calls and texts.

Commenting on the issue, Margot James, Minister for Digital and the Creative Industries, said: ‘Nuisance calls are a blight on society and we are determined to stamp them out.

‘For too long a minority of company directors have escaped justice by liquidating their firms and opening up again under a different name.

‘We want to make sure the Information Commissioner has the powers she needs to hold rogue bosses to account and put an end to these unwanted calls.’

The consultation closes in August.

Think tank suggests UK taxpayers are giving ‘majority of their income’ to the Treasury

Think tank suggests UK taxpayers are giving ‘majority of their income’ to the Treasury

Think tank the Adam Smith Institute has suggested that UK taxpayers are giving more of their income to the Treasury than at any other time.

According to research published by the Institute, from 29 May 2018, employees will be ‘working for themselves’, having worked 148 days ‘just to pay their tax bill’.

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Each year, the Adam Smith Institute calculates the number of days it takes the ‘average’ taxpayer to pay their taxes. For 2018, the Institute has suggested that ‘every penny’ workers earned up until 28 May went to the Treasury.

The Adam Smith Institute has therefore dubbed 29 May ‘Tax Freedom Day’ for 2018. From this date onwards, employees will get to ‘keep every penny they earn’, according to the Institute.

The research also revealed that this year’s Tax Freedom Day falls three days later than in 2017, and is the ‘latest it has been’ since records began in 1995.

Commenting on the findings, Sam Dumitriu, Head of Research at the Adam Smith Institute, said: ‘Tax Freedom Day is a stark illustration of the UK’s tax burden.

‘It is a reminder that public services such as education, welfare and the NHS must be paid for, either through taxes or borrowing – taxes on the next generation.’

Bank of England Governor states Brexit has ‘cost UK households £900’

The Brexit vote has left UK households ‘£900 worse off’, according to the Bank of England (BoE) Governor, Mark Carney.

In addition, the BoE stated that the UK economy is currently 2% smaller than forecast before the referendum.

Mr Carney did, however, state that there could be a ‘sharp pick-up’ in business investment once a Brexit agreement has been finalised.

Furthermore, government officials have suggested that post-Brexit customs declarations are set to change, potentially increasing the cost of Brexit. Currently, exports and imports to and from the EU, which total around 200 million each annually, do not require a customs declaration. Research carried out by the University of Nottingham’s business school and KPMG has revealed that each new customs declaration could cost an average of £32.50.

Commenting on the matter, former Conservative Cabinet Minister, John Redwood, said: ‘We have a perfectly good functioning trade system with the rest of the world at the moment. It does not cost anything like these figures.’

Meanwhile, figures published by the Office for National Statistics (ONS) show an improvement in the government’s finances, with borrowing at £7.8 billion in April – the lowest figure for April since 2008, and £1.1 billion less than in April 2017.

IFS warns tax rises will be needed in order to sustain health service

IFS warns tax rises will be needed in order to sustain health service

The Institute for Fiscal Studies (IFS) has warned that the NHS will require tax rises in order to maintain the level of service it currently supplies.

In a recently published report, the IFS stated that, with an ‘ageing population’ and an increasing pay and drugs bill, individuals’ reliance on the health service will ‘only continue to grow’.

In order to sustain the NHS and fund increases in health spending, taxes would need to rise by between 1.6% and 2.6% – equivalent to between £1,200 and £2,000 per household, said the IFS.

It also revealed that funding increases of 4% per year will be required over the medium term to ‘secure modest improvements in NHS services’.

Commenting on the issue, Paul Johnson, Director of the IFS, said: ‘If we are to have a health and social care system which meets our needs and aspirations, we will have to pay a lot more for it over the next 15 years. This time we won’t be able to rely on cutting spending elsewhere – we will have to pay more in tax.

‘But it is a choice: higher taxes and a health and social care system which meets our expectations and improves over time, or taxes at current levels and a more constrained health service delivering less than we have become accustomed to.’

UK firms give broadly positive feedback on HMRC customer service

UK firms give broadly positive feedback on HMRC customer service

According to a recently-published HMRC survey, 55% of UK mid-size businesses are satisfied with the customer service the Revenue has provided to them.

In 2016, HMRC polled 1,800 UK businesses, with a view to examining firms’ experiences in dealing with HMRC; their perceptions of current tax administration; their attitudes towards tax compliance; and their awareness of recent tax policy.

The survey revealed that 45% of businesses with 250 employees or more gave positive feedback on HMRC’s customer service – a rise when compared to the previous figure of 34%, recorded in 2015.

It also found that ‘HMRC getting tax transactions right’ proved to be the most important factor in determining firms’ overall experience. 57% of survey respondents gave a positive rating in regard to this, HMRC found.

Meanwhile, 76% of businesses surveyed stated that HMRC treated them fairly, and 81% believe that it treated them honestly.

However, 73% of firms stated that they do not believe that HMRC minimised the time, cost and effort associated with handling tax affairs.

HMRC’s customer survey can be viewed in full here.

Broadband speeds for UK households and small businesses are ‘51% slower than advertised’

Broadband speeds for UK households and small businesses are ‘51% slower than advertised’

Research conducted by consumer group Which? has revealed that, on average, many UK households and small businesses only receive half the broadband speed they pay for.

The results, which were generated by 235,000 uses of a speed-checker tool provided by Which?, revealed that customers have been paying for speeds of up to 38 megabits per second (Mbps), but in reality have only been receiving speeds of 19 Mbps.

Which? also found that packages that offered ‘super-fast’ speeds of up to 200 Mbps often were only able to achieve average speeds of 52 Mbps – just 26% of the speed advertised.

The research also suggested that customers on standard packages, which offered speeds of ‘up to 17 Mbps’, only received an average speed of 6 Mbps – a third of what was advertised.

According to Which?, customers on broadband deals of 50 Mbps received similar speeds to what was reputedly advertised. These individuals received speeds of up to 35 Mbps – 70% of that advertised.

From 23 May 2018, the Advertising Standards Authority (ASA) will no longer permit broadband providers to advertise speeds unless they can prove that the speed is received by 50% of their customers during peak times.

‘This change in the rules is good news for customers who have been continuously let down by unrealistic adverts and broadband speeds that won’t ever live up to expectations,’ said Alex Neill, Managing Director of Home Services at Which?.

‘We know that speed and reliability of service really matter to customers, and we will be keeping a close eye on providers to make sure they follow these new rules and finally deliver the service that people pay for.’